At October, 14 primary auction the Ministry of Finance borrowed almost UAH20bn and sold USD-denominated and new reserve bonds in addition to regular and UAH military securities.
Interest in military and regular bonds cooled. Demand for one-year bills more than halved, for 1.5-year bills interest fell almost three times, and for three-year bonds, bids slid by about a third. All three securities received bids with the usual interest rates, so the MoF accepted all fully. The new three-year UAH bond received a 3bp higher coupon rate than the previous paper with a maturity of two weeks later.
The Ministry completed this month's placement of FX-denominated bonds. US$350m of bonds were sold in two weeks, the same amount as last week's redemption.
Additionally, the MoF sold a new note with maturity in July 2029, i.e., with a maturity of more than 3.5 years. Demand for this instrument was huge, receiving x4.5 oversubscription while bid rates were significantly lower than for three-year paper. So, this is obviously the beginning of placing new reserve securities, but there is no further offer of this instrument in the auction schedule. That is, the MoF will add it to the offer in case of urgent need for funds.
Overall, the auction was successful, although it did not set a new record regarding borrowing volume. Banks shifted their focus to reserve securities because reserve bonds will be redeemed in early November, causing a decrease in demand for ordinary and military hryvnia securities.
